Thursday, August 7, 2014

Measuring Customer Experience: Where do we go from here?

There has been a dramatic rejuvenation in the measurement and usage of customer experience data in the past decade. Frederick Reichheld’s 2003 Harvard Business Review article, “The OneNumber You Need to Grow,” sparked a resurgence in the assessment and importance placed on customer feedback.

For better or worse, Reichheld’s Net Promoter Score (NPS) grabbed the attention of senior management in ways that customer satisfaction/loyalty research has struggled to do. Overall, this attention has been good for our clients and for us as researchers, but NPS isn’t the panacea that it is sometimes made out to be. There are several material methodological issues that need to be considered:

  1. The scores can be unstable due to using only portions of the scale, and the mathematical operation on them. For example, the American Customer Satisfaction Index (ACSI) has a margin of error of +/- 3.3%, while the NPS score on the same data has a margin of error of +/- 10%.
  2. Consistently, NPS is closely linked to customer satisfaction and overall quality; if your business is more driven by value and price, NPS may not fare as well.
  3. Differences in likelihood to recommend don’t automatically mean differences in loyalty.
    • Levels of involvement with product are a mitigating factor.
    • “Promoters” are not equally loyal.
In particular, B2B researchers have struggled to see the relevance of recommendation as the key measure of success. Fortunately, there are others to consider, including the recent emergence of the Customer Effort Score as an alternative to NPS and other more established metrics such as the Commitment Score

While the methodological issues with NPS are real and persistent, there is a portion of the approach that can be adopted regardless of the key metric used. Specifically, I am referring to the identification of individual customers who have had a negative experience (detractors, in NPS-speak) and efforts to address the individual customer’s issue directly. In my work, it’s this closed-loop feedback mechanism that drives the success or failure of a program. 

The direct linkage to actual customers allows the organization to identify and address problems one customer at a time. Extracting insights from these experiences that can then be incorporated into the structure of the customer experience is vital, but, perhaps more importantly, the business is fixing/improving/evolving the customer experience as it addresses these individual issues. Delivering a differentiated customer experience is, in many ways, a learned behavior that requires practice to make perfect.

In the end, what really matters is how you use the feedback you obtain about the customer experience to truly provide a differentiated customer experience. There are many ways to inculcate customer feedback into your organization, but successful efforts seem to share the following characteristics:

1.       A top-to-bottom cultural embrace of the importance of improving the customer experience and buy-in on the measurement program and metrics used.

2.       A coordinated effort between tactical (interaction) and strategic (relationship) customer experience measurements.

3.       Clear linkage between feedback results and other key company metrics and goals.

4.       A research design that includes sufficient granularity to support tactical decisions and line-level accountability.

5.  A flexible measurement system and strategy that stands up to business changes and evolving needs.


       Mark Willard, Managing Director, Market Strategies International

Mark has more than 20 years of experience in research. A specialist in financial services, Mark most recently held the executive vice president position at Research International, where he led the Financial Services practice and served as general manager of their East Coast offices.

Prior to Research International, Mark was the managing director and founding partner of The Willard and Shullman Group, a full-service research and consulting firm. At Willard and Shullman, Mark managed all consulting and project-related activities and was also the firm's chief methodologist. Before Willard and Shullman, Mark was an internal consultant for Citicorp, where he was involved in the development of virtually all of its customer satisfaction measurement programs worldwide.

Mark has an undergraduate degree in psychology from Hofstra University and has completed coursework toward his Ph.D. in applied psychological research, also at Hofstra.

Join me and Mary Lee of AAA for “Revolutionizing CX: How AAA Turned Satisfied Customers into Loyal Advocates” at TMRE 2014 in Boca Raton (2:30 p.m. on Tuesday, October 21). We’ll share how a new measurement program and a built-in, closed-loop system revolutionized AAA’s member experience program and empowered employees across the organization to make immediate and lasting improvements in customer experience. 

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